Repercussions of a Sale that Turned Out Not Happening – part I | Beit Din Eretz Hemda - Gazit | Beit Midrash

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Case: In 2013, the plaintiff (=pl) sold a "residential unit" to the defendant (=def), who planned to rent it out, for 380,000 NIS; def paid only 38,000 NIS. Pl allowed def to do major renovations in the unit before further payment was made. Def discontinued payment, and the sides went to secular court to determine blame for the sale stalling. In 2016, the court ruled that def was in breach of contract and had him vacate the unit. In the meantime, def had control over the property for around 35 months. During almost all of this time, def received rent from renters (the court had assumed, as of 3 months before it was returned to pl, that it was 60,000 NIS). The sides agreed that beit din should accept the court’s findings as the binding basis of the adjudication in beit din. Pl demands to receive the rent def took; neither side knows exactly how much def received. The two sides also disagree about damages to the unit during this period, with pl claiming he paid a contractor 30,000 NIS to fix them. Pl also wants def to pay for expenses of the sale, which became moot – lawyer’s and realtor’s fees and mas shevach (tax on real estate appreciation). Def claims to have spent 67,000 NIS on renovations, which made the unit fit for rental, and he demands to be reimbursed. Def wants to invoke a statute of limitations on many of pl’s claims.

Ruling: Proceeds of rent: Since the court ruling had been to void the sale based on a crucial breach, pl deserves to have received the rent. Def had told the court that he received 2,000 NIS for most of the time of the rental and had not given it to pl because it went toward paying for the renovations. Def claims to never having admitted receiving 60,000 NIS, but just providing the basic framework. In fact, def claims that some of the renters did not pay and that they had to pay for repairs between renters. However, neither pl nor even def has a record of how much was received.

In a case in which both sides agree to an obligation and neither knows the amount, the Shulchan Aruch (Choshen Mishpat 75:18) has two opinions as to whether the defendant is totally exempt from the difference between the highest and lowest possible amounts or there is a moral obligation to work out a compromise. The Shach (ad loc. 67) follows the opinion of exemption. However, one of the reasons given for the exemption is that just as the defendant is at fault for not knowing how much he owes, so is the plaintiff at fault for not knowing how much he deserves. In this case, since pl had no way of knowing how much def received from renters, we will employ a mechanism of compromise (the calculation came out to 56,550 NIS). Def does not have a right to subtract from this amount for upkeep, because he was not acting with the authorization of the homeowner (see Ketubot 79b). We will discuss separately charges for improving the unit.

We will continue with other elements of the dispute next time.